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DIGITAL NOTES

Apple’s efforts to create an Internet radio service to compete with Pandora has been delayed by licensing negotiations with music companies, according to a number of people briefed on the talks.

Apple had hoped to introduce the service early this year, but now it is not likely to reach the market until the summer, if not later, according to these people, who spoke on condition of anonymity because the talks were confidential.

Apple has never announced the service — quickly nicknamed iRadio by analysts and technology journalists — but its intentions have slowly been leaking out since last fall. According to music executives then and now, Apple wants to preload an app on its mobile devices that can deliver a free stream of songs tailored to each user’s taste and supported through its iAds advertising platform.

Such an app would have a vast potential audience. It would also pose a threat to Pandora, which dominates the Internet radio field with more than 65 million regular users and, according to Apple’s charts, is its second-most popular free app of all time. (No. 1 is Facebook.)Read more…

Len Blavatnik, the Russian-born billionaire investor who bought the Warner Music Group two years ago, has placed big bets on multiple digital music services as the streaming model grows around the world.

Mr. Blavatnik’s holding company, Access Industries, is one of several parties investing $60 million in Daisy, a planned service by Beats Electronics, the high-end headphone company, Beats announced late Tuesday. The others are Marc Rowan of Apollo Global Management; James Packer, of Australia; and the Texas oil heir Lee M. Bass.

Daisy — still only a code name, and not confirmed as the service’s eventual brand name — will compete with Spotify, Rhapsody, Rdio and others by letting users stream millions of songs by subscription. But it is not the only such service backed by Mr. Blavatnik. In October, Access invested $130 million in Deezer, a French company that has said it wants to open in over 100 countries around the world, including the major developed markets like the United States and Western Europe and also throughout Asia, Africa and Latin America.Read more…

Faced with rising royalty costs, Pandora will limit the amount of free music that its users will have access to on mobile devices.

In a blog post on Wednesday, Tim Westergren, the founder and public face of Pandora, said that a limit of 40 hours a month on mobile devices would take effect this week for its free service. The change, he said, would affect less than 4 percent of its more than 65 million regular customers, since its average listener spends about 20 hours a month on the service.

To continue listening, Pandora’s mobile users can upgrade to its $36-a-year paid version or switch to listening via computer. A spokeswoman for the company said the move was most likely temporary, but that it had no plans for lifting the limit.

The reason Mr. Westergren gave was the rising cost of its music licenses. Its per-song royalty rates have increased 25 percent over the last three years, he said, and are to go up 16 percent over the next two years.

The answer, as anyone who has paid attention to the music industry knows, was a most definite no. Aside from a couple of positive blips along the way, the recorded music business — shaken by digital media, the Internet and the loss of thousands of record stores — has been in precipitous decline for more than a decade.

So for those who have seen the industry’s optimism dashed before, an upbeat report on Tuesday by its global trade body, the International Federation for the Phonographic Industry brought hope and skepticism. According to the report, the trade (or wholesale) value of global recorded music sales in 2012 was $16.5 billion, up 0.3 percent from the year before, the international market’s first year-over-year gain since 1999.

Digital music was responsible for much of that growth, such as it is. In developed markets like the United States, people are buying more digital files and starting to subscribe in significant numbers to streaming services like Spotify. (They are also getting less and less music through unauthorized peer-to-peer networks, according to another report on Tuesday by the NPD Group, a consumer-research firm.) These services are also rapidly spreading overseas. “Major” ones like iTunes, Spotify and Deezer are now available in more than 100 countries, up from 23 just two years ago, according to the I.F.P.I., while some countries, like Kenya and Vietnam, saw their first digital music services open last year.

Those trends are all positive, and if they continue they could allow the music industry to earn money in areas once thought completely spoiled by piracy. But despite this good news, there are still some possible problems, as well as questions about how the new digital economy will work.Read more…

When it comes to the music industry, there are two Googles. And the difference between them leads to a complicated and fraught relationship.

One Google is represented by its suite of entertainment media services like YouTube and Google Play, which have licensing agreements with the major labels and music publishers, along with movie studios and other media companies. That side is slowly becoming integrated into the fabric of the entertainment industry, through deals like the one announced by Billboard magazine this week that it would start incorporating YouTube play counts into its chart formulas.

The other side of Google is its mighty search engine, the road map to the Internet, which people use to find content of all kinds — some of it preferred by the entertainment industry, but a great deal of it not. This is the side of Google that has the most frequent and public fights with the entertainment industry (though, to be sure, media companies have had no shortage of conflict with YouTube over the years).

The latest incarnation of Big Media vs. Google search is a report issued on Thursday by the Recording Industry Association of America, or R.I.A.A., accusing Google of failing to make good on its own promises to punish pirate Web sites. In August, Google said it would take into account notices of copyright violation — of which the music industry files thousands each week — in determining a site’s search rank. The implication was that infringing sites would fall into obscurity and consumers would “find legitimate, quality sources of content more easily,” as Amit Singhal, a senior Google executive, wrote in a company blog post at the time.Read more…

Western music fans have no shortage of digital music services to choose from, and that abundance is spreading around the world. Apple’s iTunes is now in 119 countries, and others are racing to plant their digital flags everywhere. This week, for example, Spotify opened in Italy, Poland and Portugal, bringing its reach to 23 countries.

But just as interesting, and in the long run perhaps as significant to competition, is the rise of services that serve regional markets intensely. One is Saavn, a Spotify-like streaming service that specializes in Indian music, and has garnered 10.5 million monthly users with advertising-supported free listening. This week it will announce that it has taken another page from Spotify’s book, by offering a premium version at $4 a month that eliminates the ads, lets users listen to songs offline and will eventually add other features like higher quality audio.

Saavn, which has offices in New York, India and Mountain View, Calif., has a catalog of 1.1 million songs in nine languages and is available in more than 200 countries, with about 70 percent of its consumption within India, said Rishi Malhotra, one of its founders. Like Spotify, iHeartRadio and other Western services, it is an official partner of Facebook. About 80 percent of its use is on mobile devices, Mr. Malhotra said, and when the premium service, Saavn Pro, is opened in March, it will at first be available only for Apple devices.Read more…

5:19 p.m. | Updated Like any major awards show, the Grammys inspire no shortage of clairvoyants who claim to know how the Recording Academy’s fickle (yet conservative) voters think. They are often wrong, of course. One example: Two years ago virtually every expert was sure that Eminem would sweep the major categories; he won none of them.

The social media age has brought lots of new indicators of potential Grammy success, and this year Shazam, Spotify and Mashable, among others, made guesses based on user data and online chatter. But did these fare better than the human experts this year?

Not much, perhaps because, as Grammy watchers frequently point out, the industry insiders who vote on the prizes are not always aligned with popular — or critical — tastes.

In the four major award categories — album, record and song of the year, and best new artist — the most successful crowd-sourced prediction was by Shazam, the song-identifying app, which looked to how many times songs were “tagged” on the service. Its choices were correct three times: Fun., for song (“We Are Young”) and best new artist, and Gotye’s “Somebody That I Used to Know” for record of the year. (Record of the year is for a single’s performers and producers; song of the year is for songwriters.)

But Shazam was off the mark with album of the year. It favored Fun.’s “Some Nights” by a huge lead, but the prize went to Mumford & Sons’ “Babel” — a Read more…

D.J.’s in nightclubs sometimes brag that the songs they play are obscure enough to be “un-Shazam-able.” That distinction will soon be harder to attain, however, as Shazam, the popular name-that-song app, expands its database through a deal with Beatport, the leading dance-music download store.

Shazam, which says it has 275 million users, has become one of the world’s most popular apps by quickly “tagging,” or identifying, songs as they play, whether on the radio, on television or in a D.J.’s set. Dance music is one of its most popular genres, making up 31 of its 100 most tagged songs last year, Will Mills, Shazam’s director of music and content, said in an interview on Tuesday.

Even though Shazam has a catalog of more than 25 million songs, it is not enough — particularly in the fast-moving dance genre, in which songs uploaded from a producer’s laptop can become instant underground hits. That is where Beatport comes in. Founded in 2004, Beatport has become the de facto central store for dance downloads, often getting them long before other retailers. The company says it releases as many as 20,000 new tracks each week, about a third of them not available elsewhere.

Shazam says the deal will add about 1.5 million songs from Beatport to its database, which when tagged can send users back to Beatport to buy the tracks; users can also watch a YouTube video, for example, or send a note about it to their Facebook contacts. As with Shazam’s other deals, the company collects an affiliate fee for sales that it facilitates through the app.

The access to Beatport’s catalog could also give Shazam an advantage over its closest competitor, SoundHound, which last year said it had reached 100 million users. Shazam also has a few tricks that can help in a dance club — for example, it can identify a song even if it has been sped up or slowed down, as D.J.’s often do, or if other sounds interfere, like shouting patrons or the occasional bullhorn.

“There is always going to be an element of D.J.’s putting on effects and layer sounds,” Mr. Mills said. “We’ve got that bit sorted.”

In Tuesday’s paper, I wrote about the royalties that musicians and record companies earn from online streaming companies like Spotify, Pandora and YouTube.

As an overview of a complicated issue, the article made only brief mention of some important points, and it omitted others altogether. So to flesh out this issue a little more, and, I hope, to answer some of the questions that readers have asked, here are a few additional points — call them footnotes — about royalties, streaming and the music business.

1. The role of record labels. When it comes to royalties, the relationship between artist and label has long been fraught, but it has become especially strained in the streaming age, for two reasons.

First, digital services generally don’t do business with musicians directly, but instead go through labels or distributors, which are then responsible for paying royalties. But exactly how those royalties are calculated is often in dispute. Older artists may have no provisions in their contracts for such streaming services, or digital music at all. And despite some major lawsuits, the matter is far from settled.

Second, there is wide suspicion in the industry about the deals between labels and digital services. Labels own equity in some of these services, as a condition of licensing their content. (The major labels, for example, own a minority stake in Spotify.) Critics say this creates a conflict of interest, in which labels could accept a lower royalty rate in exchange the benefits of ownership, like profits from a sale. Artists — and, especially, their managers and lawyers — worry that this money would never trickle down to them.Read more…

The competition among streaming music services is going global. It is also increasingly going free.

As CD and download sales cool, the music industry is looking to subscription services like Spotify, Rhapsody and Deezer to provide an attractive alternative to pirated content. But the growth of these companies has been relatively slow, and to compete against one another, more of them are opening free tiers — a move that gets attention, but has always caused worries that it could undermine the value of music.

Rdio, a subscription service created by the founders of Skype, is the latest to offer music gratis. On Monday, the service, whose regular prices are $5 and $10 a month, said that it would offer a free level in most of the countries in which it operates, after doing so in the United States in late 2011. The plan includes a limited amount of free music for six months — the company is secretive about exactly how much free music you get — and, unlike most other services that have a free tier, it has no advertising.

“I don’t want to devalue the content,” said Drew Larner, the chief executive of Rdio. “But we certainly have come around to the fact that in order to get the largest amount of people into the top of the funnel, the state of play is now that a free offering is critical.”Read more…

Last year, the growing popularity of electronic dance music, or E.D.M., brought out the deal-makers of the music industry as if drawn to the scent of prey. A handful of big dance promoters were sold, and one media mogul, Robert F.X. Sillerman, announced plans to build a $1 billion dance music empire. But the year ended without any big, market-defining deal.

That deal may be coming soon, however, with the possible sale of Insomniac Events, which puts on the huge Electric Daisy Carnival festival. Bidders for the company include Live Nation Entertainment and Mr. Sillerman’s company, SFX Entertainment. AEG Live and Red Light Management, an artist management firm with interests in music festivals like Bonnaroo, have also made offers but are not believed to be strong contenders in the auction, according to several people directly involved with the talks.

These companies — among the biggest players in live music — are valuing Insomniac at between $70 million and $100 million, and are looking to buy anywhere from 50 to 100 percent of the business, said these people, who spoke on condition of anonymity because the talks were ongoing.

Representatives of all the companies declined to comment.

Insomniac, founded 20 years ago by Pasquale Rotella, is the biggest promoter of electronic dance music in the country. The company sold more than one million tickets last year to dozens of events; its biggest, the Electric Daisy Carnival in Las Vegas, had more than 300,000 people in attendance over three days. The company did not report sales figures for that event, but a smaller Electric Daisy last year, in Read more…

Amazon has stepped up its competition against iTunes with a version of its MP3 store for Apple’s iPhones and iPod Touch devices.

Long a distant second to Apple in digital music sales, Amazon has been moving aggressively over the last couple of years to attract music fans. It regularly discounts digital versions of hit albums and songs, something that has occasionally wrought some mischief on the Billboard charts. And its Cloud Player and Cloud Drive systems, introduced almost two years ago, let its customers back up their songs and stream them to virtually any device. (Apple, Google and others have their own versions of these so-called “lockers.”)

But until now, customers who have iPhones and other portable devices that use Apple’s iOS operating system, could not buy Amazon’s MP3’s from their device. The new, “optimized” version of Amazon’s store — not really an app, but an HTML5 page, easily viewable on a portable device — lets users do that, putting Amazon and its frequent discounts on downloads in direct competition with iTunes.

“Since the launch of the Amazon Cloud Player app for iPhone and iPod touch, a top request from customers has been the ability to buy music from Amazon right from their devices,” Steve Boom, the vice president of Amazon Music, said in a statement. “For the first time ever, iOS users have a way do that.”

HTML5 has become a popular way for developers and media companies to circumvent iTunes, which — in addition to occasionally rejecting apps, as has happened to the embattled music service Grooveshark — takes a 30 percent cut of all in-app revenue for Apple.Read more…

The popularity of satellite and Internet radio is starting to lead to larger royalty checks for musicians.

SoundExchange, the organization that collects royalties from these services, said on Thursday that it paid $462 million to performers and record companies last year, up 58 percent from 2011. Not long ago, SoundExchange’s payments were considered minimal by most musicians, but they have been growing quickly. In June, the organization announced that it had paid $1 billion in royalties since its founding in 2000.

These payments represent a royalty not otherwise available to most artists. By law, satellite and Internet radio services must pay the performers and copyright holders of a recording, in addition to songwriters and publishers; terrestrial broadcasters pay only the publishing side. (SoundExchange does not handle royalties for downloads, nor for the on-demand streams of companies like Spotify and Rhapsody.)

The growth of services like Pandora and Sirius XM Radio has been the driving force behind the increased royalties. Pandora now has 67 million listeners each month — a third more than it had a year ago — and Sirius XM now has nearly 24 million paying subscribers. But the rate these companies pay has been in dispute lately.

Pandora backed a bill in Congress last fall that could have lowered its rates; it was aggressively opposed by music industry groups, including SoundExchange, and the bill expired at the end of the year. In court hearings last year, Sirius pushed for lower rates; its rates were increased through 2017, but not as much as SoundExchange had wanted.

SoundExchange’s royalties are growing, but they still represent a fraction of the revenue from recorded music, which, according to the Recording Industry Association of America, was just over $7 billion in 2011.

Tracking the Industry, in Part: Next Big Sound, a company that measures the social activity surrounding online music, this week offered another encouraging glimpse of the market. In its year-end report, it said it measured 93.8 billion streams of songs last year, up 45 percent from 2011. Combing through artist Facebook accounts, Twitter feeds and other sources, it found find 17.1 billion profile views and 5.7 billion “new fans” of music.

Most of the numbers in the report — YouTube and Vevo views, Wikipedia page views — point upward. Among the sites Next Big Sound tracks, the biggest gainer was SoundCloud, which lets musicians, labels and fans upload tracks that can be streamed or embedded on social sites like Tumblr. According to Next Big Sound, its fan activity tripled last year. (Last month, SoundCloud said it had 180 million users around the world.)

It also found that while independent acts tend to do very well on Facebook, Twitter and other sites (especially SoundCloud), that shrinks on Vevo and YouTube; Vevo is owned by Universal and Sony Music, and many independent labels do not have licensing deals with it.

But like the SoundExchange numbers, Next Big Sound’s report covers only a certain chunk of the overall market. It excludes data from Pandora, Spotify, iTunes and other services whose listening data is not public, as well as visits to artists’ own Web sites.

Amazon is turning to an unlikely old friend to step up its competition in digital music: CD’s.

Almost two years ago Amazon introduced its Cloud Player, which lets customers back up their digital music files and stream them on any device; Google and Apple soon followed with their versions.

On Thursday, Amazon introduced an enhancement to the service called AutoRip, which expands Cloud Player libraries to include everything its customers have bought on CD, stretching back all the way to 1998. That Baha Men album you bought from Amazon 13 years ago, in other words, can now be listened to instantly through a phone or tablet.

“What we’re doing with AutoRip is bringing the cloud to physical music, eliminating that distinction,” said Steve Boom, Amazon’s vice president for digital music.

Variations on this have existed before, but they have often met with resistance — if not litigation — from music companies. MP3.com, for example, let customers gain access to their music online after a CD was inserted into a computer to verify ownership, but it was sued for copyright infringement and eventually shut down; AnywhereCD, by the same entrepreneur, Michael Robertson, was introduced in 2005, but again ran into problems with labels.

Amazon has gotten around these problems by striking licensing deals with music companies.Read more…

For years, the radio industry has watched with worry as consumers snap up all kinds of electronic gadgets — from cellphones to tablets to set-top TV boxes — that deliver seemingly every kind of media but that old standby, terrestrial radio.

This week, broadcasters won a victory of sorts through a deal with Sprint Nextel, which will make local FM radio signals available on some of its smartphones. It is the first such deal with a phone carrier after years of pressure from the major radio broadcasters. Yet whether customers, and other phone companies, will take to the idea is far from certain.

“My mission is to get radio in 300 million cellphones,” said Jeffrey Smulyan, chief executive of Emmis Communications, who represented a wide group of radio companies in negotiations. “This is a very important start.”

Under the three-year deal, announced on Tuesday, Sprint will make FM radio available on some of its Android and Windows phones, using a tuner application called NextRadio. The app — designed by Emmis, which owns 21 stations around the country — will allow some interactivity with other forms of media on the phone. Mr. Smulyan said he believed that radio listening could increase 15 percent if it were widely available on cellphones.Read more…